COMMENTARY: Short-term rentals vital to N.S. tourism boom

Last summer, there were days where Halifax’s already expensive hotels were completely booked. Bed and breakfasts were full, too, as were the university residences which double as accommodations in the summer.

While this sounds like a dream scenario for the tourism industry, the lack of accommodation forced many potential visitors to look elsewhere, costing Halifax hundreds of thousands of much-needed tourism dollars.

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New hotel construction has mostly stalled in recent years, with the exception of the Sutton Place, a luxury property which will be the anchor hotel for the Nova Centre, but whose addition does little to help the more budget-conscious traveller.

Halifax stands out among similar Canadian cities as a comparatively pricey hotel market. Quality tends to be high, and low-cost options are limited, leaving many visitors unable to come to the city during peak summer months.

A recent report by Horwath HTL, a consulting firm, shows Halifax has among the lowest number of budget accommodations of any Canadian city, with the majority of properties being mid- to high-end. To add to this, the number of hospitality properties in the city fell by 20 per cent between 2011 and 2016.

However, having a quiet winter season — although the city is trying to attract off-season visitors — the impetus to construct new hotels is limited. And with summer now upon us, Halifax is likely to face a similar strain on its accommodation supply.

Into this void, short-term rentals, if sensibly regulated, can provide a much-needed solution to the problem.

Rental platforms like Airbnb, VRBO and others have proliferated in recent years, allowing homeowners to earn extra income renting out vacant rooms, or their entire property if they desire. This concept is great for travellers looking for non-hotel options, and residents seeking to capitalize on their homes.

In a study on improving tourist accommodation in the city, Halifax-based research firm Group ATN Consulting stressed the need for more short-term rental-style properties in the market to address not only seasonality, but to meet demand for different lodging types and sizes to cater to a changing tourism market.

Yet, if not properly governed, a boom in short-term rentals can have consequences, affecting neighbours, turning residential buildings into de facto hotels — with none of the requisite taxes being collected by the government — and posing safety concerns with owners packing people into properties like sardines.

Nova Scotia is currently studying the issue and is considering implementing regulations on whether short-term rentals will be permitted or not. At present, it is unclear which direction the government will take.

While the problems associated with illegal short-term rentals are real, for a market like Halifax, allowing this type of activity within strict but reasonable guidelines could help the city maximize its tourist income-generating potential during the fleeting summer season.

Numerous examples exist of cities enacting smart legislation in this area. These include limiting the number of days owners can rent their homes, charging rentals the same taxes traditional hospitality businesses pay, only allowing rentals in certain areas, requiring homeowners to purchase a business licence, have their properties inspected, and more.

Libertarians argue that people should have a right to do what they wish with their property. Yet this view has its limits when it conflicts with the character of a neighbourhood, other people’s peaceful enjoyment of their homes, or running a full-scale business without being subject to the same strictures as an actual businesses.

Alternatively, those who wish to ban short-term rentals for reasons ranging from the potential impact on housing supply, NIMBY-ism or anti-capitalist arguments are also off the mark.

Opposition from the traditional hotel industry also comes with its caveats. In almost all markets where short-term rentals have become a significant presence, the local hotel industry has generally not suffered. In fact, across North America, hotels are largely seeing higher occupancy and higher nightly rates than they have in years.

To those concerned about short-term rentals affecting housing supply, an attractive option for cities like Halifax, where rents are increasing, apartment vacancies are low and homelessness is high, is to use the tax revenue from short-term rentals to build low-income housing.

No matter which side of the debate one is on, the wealth creating, tax generating and entrepreneurial possibilities that short-term rentals allow are enormous.

For young people, subletting their apartment for a weekend can make the difference between paying rent or not. For seniors, the ability to meet people from around the world while earning extra income can be a much-needed boost both emotionally and financially. And for new immigrants starting a business, a few thousand dollars extra can go a long way.

With one of the stated goals of Tourism Nova Scotia being to increase tourism spending from roughly $2 billion in 2014 to $4 billion by 2024, legal, regulated short-term rentals should play an integral role in getting there.

Sandy White is an entrepreneur based in Montreal who formerly studied in Halifax. He now own a number of hospitality properties across Canada and is a regular commentator on Canadian politics and business.